Windows 8 Adoption Slows Ahead Of Windows 8.1

Windows 7 gained more ground than Win 8 in September, according to Net Applications data. Will that change once Win 8.1 debuts in October?

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Windows 8 expanded its desktop market share only modestly in September, its last full month before Windows 8.1 hits the market, according to the newest figures from Web tracking firm Net Applications. Microsoft's newest OS placed third overall, behind first-place Windows 7, which actually gained more users in September than Windows 8 did, and Windows XP.

Windows 7 accounted for nearly half of all desktop users, at 46.43%, up from 45.63% in August. It gained users largely at the expense of second-place Windows XP, which will lose service in April. Microsoft's stalwart but long-in-tooth OS hung onto 31.41% of the market, down from 33.66% in August, and down substantially from 39.51% in January. Microsoft COO Kevin Turner said in September that 21% of Microsoft's commercial customers are still using XP, and that the company expects to reduce that number to 13% by April.

Windows 8 rose to 8.01% of the market, up from 7.41% in August. The 8.1% increase in market share represents one of Windows 8's worst month-over-month increases since launch, though precise calculations are difficult because Net Applications modified its methodology over the summer; the firm still derives data from Web traffic, tracking 160 million monthly visits to 40,000 websites, but recently stopped including "hidden pages," or pages that load but are never viewed by the user.

To an extent, this outcome is somewhat predictable; many businesses leaving XP are better served at this point by Windows 7, which generally represents a simpler transition than Windows 8. But Windows 8 also failed to build on an ostensible surge last month. After accounting for only 5.40% in July, the OS jumped 37.2% to 7.41% in August, suggesting a strong September that never materialized.

Still, it's somewhat natural that Windows 8 adoption would slow just before the launch of a major update, as many would-be buyers are likely delaying purchases until Windows 8.1 hits the market. The Net Applications data supports this to a certain extent. Even though Windows 8.1 is still only available as a public preview, it nonetheless accounted for 0.87% of the market, up from 0.24% in August.

Indeed, if Windows 8.1 preview users are included in the overall Windows 8 total, then Windows 8 gained more users in August than Windows 7.

Outside of the top three, Windows Vista continued to persist on its death bed, down to 3.98% of the market from 4.11% the month before. Mac OS X 10.8, the most widely used version of Apple's OS, grabbed 3.69% of the market, up from 3.42% in August.

Credit: Net Applications

Overall, Windows machines comprised 90.83% of the PC market in September, down slightly from 91.19% in August. OS X grew to 7.53%, up from 7.28% the month before.

Windows 8.1 should help adoption of Microsoft's latest flagship OS. Unlike the current version, the update will allow users to boot directly to the desktop, bypassing the tablet-centric Live Tiles of the Modern UI. It will also include a Start button, albeit not one with the Start Menu from Windows 7.

These and other new features could make the OS more palatable to those who are leery of Win 8's departures from previous versions. But there's a risk for Microsoft in catering to longtime desktop users' demands: Users can now effectively shut off the Modern UI.

As Apple CEO Tim Cook is fond of saying, market share is less important than usage share. The iPhone, for example, trails Android in market share but dominates in metrics such as Web usage. This implies that iPhone users are more engaged with their devices than Android users are, and explains why iOS attracts more developers and generates more profit than all its competitors, despite having a lesser share of the market.

This applies to Windows 8.1 because it's possible for the OS's market share to increase even while interest in the Modern UI continues to flounder. If Windows 8.1 users spend much more time using legacy desktop applications than using Modern UI apps, developers have less incentive to develop for Microsoft's new platform. Given that this platform sits at the center of outgoing CEO Steve Ballmer's reorganization plan, this scenario has to be disconcerting to Microsoft.

However, Windows 8.1 should also help Microsoft make progress among tablet users, helping it to somewhat compensate for Win 8.1 desktop users who shut off the Modern UI. Gartner analyst Carolina Milanesi recently told InformationWeek that many businesses like Windows 8.1 laptop-tablet hybrids because they allow IT to deploy one device in place of two, for example.

"Microsoft COO Kevin Turner said in September that 21% of Microsoft's commercial customers are still using XP, and that the company expects to reduce that number to 13% by April." That's a pretty ambitious change plan by April. I see XP over and over again in the wild in retail and hospitality settings.

Yep, it definitely puts it into perspective. Windows 8 is being used by WAY more people than all versions of OS X combined, and once Windows 8.1 arrives, the margin will grow larger still.

Nonetheless, it's complicated. Apple has to be a little concerned that Mac sales have been soft in recent quarters; the brand had until that point been resistant to the larger PC market's downturns.

But to an extent, Apple could care less about market share. Apple dominates laptop sales over $1000, and makes nice, fat margins on each. iMacs are popular too, and even Apple's forgotten step children, like the Mac Mini, are very profitable. Microsoft gets a lot of tangential benefit from Windows, but in terms of direct profit, it just gets a bunch of license royalties, and Windows OEMs have traditionally moved a lot of volume with low-margin commodity hardware sold at low prices. Apple gets not only revenue from OS upgrades, which is neither huge nor nominal, but also the kind of hardware revenue that Microsoft can only dream of. Pros and cons to each approach.

Microsoft's Windows-related profits have changed thanks to the Surface line and Windows 8, of course. I think Windows 8.1 will be better, and I think both the new Surface tablets are great pieces of hardware-- albeit very questionably priced. For Microsoft, though, the Surface Pro 2 won't just have to prove the merits Windows 8.1; it will also have to invade some of the markets where MacBook Airs and MacBook Pros have traditionally gobbled up market share. If Microsoft can actually make headway in this price bracket, it would be impressive.

More and more consumers are going the Apple way as consumer PC buyers are forced to take Windows8 while businesses still buy Win7 machines. Go to Best Buy and you won't find any Win7 PCs. If a consumer is going to be forced to relearn the OS i.e. Win8 verses Win7/XP then why not change to a vendor that doesn't re-arrange the deck chairs with each major release?

As existing XP or Win7 consumers look to replace their aging PC, Windows 8 has opened the door to considering alternatives. Those PC consumers owning iPads and iPhones will be more open to switch to an iMac or MacBook. Apple will make improved gains going forward as Microsoft sticks to its guns with Win8 for all devices. If you were to break down the sales chart between business share and consumer share I bet Win8 is loosing to Mac OS in the consumer share.

It's true, though I think a lot of the "replacements" will never happen. If we take ten aging Windows XP computers, one or two might get replaced by a new Windows machine, one or two might get replaced by a new OS X or Chromebook option, four or five might get "replaced" by tablets, and at least one will probably just sit there, continuing to age. I'm just making up numbers for the sake of an example, but you get the idea. Consumer PCs aren't going to be replaced at a 100% clip, and the ones that do get replaced aren't going to get replaced themselves for several years. So there's an opened door for alternatives, but the doorway isn't all that big.